Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.

Gold Rushes over $1,300

Posted Monday, September 27, 2010, at 9:27 AM

Gold extended its decade-long rally this week, with gold for December delivery reaching a new record price of $1301.60 per ounce on Friday morning. Over the last year, gold prices have risen $300/oz (+30%).

Much of gold's gains this week came on Tuesday afternoon on the heels of a report from the Federal Open Market Committee (FOMC). Traders viewed the FOMC statement as supportive for stocks, precious metals and bonds, as the statement implied that the Federal Reserve would continue keeping interest rates extremely low in order to stimulate the economy and increase the rate of inflation. Within hours after the release of the FOMC statement, gold jumped $20 an ounce to $1192. Gold continued to edge higher all week, reaching its peak on Friday morning.

The rally in gold was coincided by a sharp rise in silver prices, which reached 30-year highs at $21.50/oz on Friday. The bull market in silver has been ever stronger than gold, with silver rising 36% over the last year.

Cattle Prices Wallowing

Rising commodities prices this week could not help the cattle market, which took a sharp 4% drop this week on news of increasing cattle supplies. A report released last weekend showed that the number of cattle placed into feedlots increased 7% over last year. Cattle supplies had been tight over the last year, but last week's report showed that more beef may be flooding the market in months to come.

With unemployment hovering near 10%, many consumers are still wary of spending money on expensive meat cuts. Without strong demand from the public, beef prices could drop much more in the coming months as cattle supplies are return to normal levels. As of late trading on Friday, live cattle prices were hovering near 96 cents per pound, down 4 cents from last week.